Translating Consideration into Cross-Border Contracts

Legal Translation Services that Capture Differences between Common Law and Civil Law Systems

There is no question that the world is getting smaller when it comes to translation of commercial contracts, cross-border e-Discovery with the need for foreign language document review and translation, and taking remote interpreted video deposition testimony of foreign witnesses who are located in a foreign country.  The exchange of goods and services across national borders only increases over time. Indeed, as the costs of transportation of goods and services trend down, the global market moves forward.

The global market is held together by the contracts between the parties exchanging the goods and services. As such, that fundamental tool – the commercial contract – might run into some issues when the parties involved are from different legal systems. Stated differently, a commercial contract in a common law jurisdiction may have a different interpretation in a civil law jurisdiction.

The common law/civil law dichotomy is exemplified with regard to the concept of consideration. The understanding a company or law firm has of how a contract is formed and enforced in their own jurisdiction might not match the understanding of their contracting partners in foreign countries. That misunderstanding could ultimately end in litigation.

This blog will discuss the difference in contract formation between common law jurisdictions and civil law jurisdictions, and how legal translation services can help ensure that consideration is properly expressed in an international commercial contract to minimize the chance of misunderstanding.

In that vein, with any international commercial contract, your first step is to hire a professional legal translator to help you avoid issues related to ambiguity in foreign language contracts and provide legal translation services to help your non-English-speaking client comply with the duty to read the contract. A legal translator is important, not just any translator, so that you can be assured that the technical terms in the contract are properly translated. We welcome you to contact legal translators for lawyers at All Language Alliance, Inc. For years, we have assisted attorneys and business professionals with translating international contracts. We can be an asset to the translation of any international contract.

Legal Translation of the Concept of Consideration

All too often those making contracts internationally are under the impression that the agreements they make will be interpreted and enforced in the same way, no matter where the parties reside. Not so fast.

While intent, offer, and acceptance are common to both civil and common law jurisdictions, common law jurisdictions also look for the act of bargaining, which involves the concept of consideration. Those in civil law jurisdictions, however, are unaware of the need for consideration.

A great example of the issues that arise without consideration, look at the old 1869 classic case of Hamer v. Sidway. In that case, William Story offered his 15-year-old nephew $5,000 if his nephew would refrain from drinking, smoking, swearing, and gambling until he reached the age of 21. The nephew dutifully lived a rather vice-free life for the next six years based on the promise of his uncle.

On his 21st birthday, Story’s nephew asked for his uncle to come clean on his promise. Story responded by saying that he would pay his nephew when he believed that his nephew as ready to have that much money. ($5,000 in 1869 is about $90,000 in today’s dollars.) Of course, as luck would have it, before Story could transfer the money to his nephew, he died. Ultimately, the case became a claim against the executor of Story’s estate, Mr. Sidway.

Sidway argued that the promise to pay the $5,000 was merely a gift. Therefore, the promise was simply an undelivered gift that expired upon Story’s death. The nephew countered that his refraining from drinking, smoking, etc. was sufficient consideration to turn the gift into an enforceable contract. The court agreed with the nephew.

Accordingly, Hamer v. Sidway is a great example of the interplay between a contract that could be viewed as having, or not having, consideration.

Consideration-Less Contracts Under the Civil Law

There are generally three types of contracts that are enforceable in a civil law context that will typically fail in a common law jurisdiction for lack of consideration. They are as follows:

The Option Contract. An offer to hold a contract open for a period of time is normally irrevocable in civil law jurisdictions. In France, for example, the agreement between the parties is binding. In a common law jurisdiction, however, the option to enter into a future contract without consideration is typically unenforceable.
The Unilateral Contract. Although the common law has the equitable principle of promissory estoppel where a contract can be found when someone relies on a promise to their detriment, a unilateral offer to do something without consideration is unenforceable at common law. In France, a mere agreement to perform by the person receiving the offer is sufficient to create a contract.
The Gift. As with Mr. Sidway’s argument in Hamer v. Sidway, the offer to make a gift where there is no consideration does not form an enforceable contract at common law. Again, however, in a civil law context, such gifts are enforceable if made in the presence of a notary.

Legal Translation Service Can Help the Consideration Issue in International Contracts

At bottom, common law jurisdictions require just one more provision that civil law jurisdictions do not for commercial contracts – consideration. Accordingly, if an international commercial contract is clear on the consideration element, then the contract will have the greatest chance to be enforceable in either civil or common law jurisdictions.

All Language Alliance, Inc. can be invaluable when you are negotiating an international commercial contract. We understand how to translate legal “terms of art,” legal terminology, legal documentation, and legalese from any language to English and from English to any language. Email our legal translation service today to learn more about translating international contracts from German, Hebrew, French, Chinese, Portuguese, Spanish, Norwegian, and other languages.

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